Editor’s Note: Sallie Krawcheck is cofounder and CEO of Ellevest. The opinions expressed in this commentary are her own.
Diversity works. You know that. Cognitive diversity, representing a range of opinions, is the hallmark of a superior management team. Companies that bring different points of view and perspectives and knowledge to the table make better decisions.
And this cognitive diversity is, in turn, driven by diversity of all kinds: background, education, experience, nationality, skin color and gender.
For companies, gender diversity in particular has been shown to lead to higher returns on capital, less risk-taking, greater employee engagement, greater customer engagement, and even greater innovation. Diverse leadership teams outperform “smarter” leadership teams.
That’s the power of diversity in corporate America. Everybody gets it, and shareholders should be demanding it.
But some of the most common ways companies seek to improve diversity are not working.
- Your diversity committees
- Your women’s groups
- Your unconscious bias training
- Filling the pipeline with high-potential junior executives
- Talking about the importance of diversity at town halls
- Giving middle managers a distinct set of diversity targets separate from overall business goals
- Your mentoring programs
- Putting pictures of women and people of color in your annual report
- Coaching women to act more like…you know….men
- Having women read books on how to get ahead, get a seat at the table, get paid what they’re worth, and in general, be professional badasses
Yes. You heard me right. None of these are working.
We know these methods don’t work because so many companies are doing so many of these things, and yet, still, the progress of diversity in business has stalled: Today, we have fewer women CEOs in the Fortune 500 than CEOs named James. The number of female CEOs leading Fortune 500 companies has declined by 25% over the past year. The gender pay gap is decades away from closing for Caucasian women, 100-plus years away from closing for black women and 200-plus years away from closing for Latina women.
Ouch.
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The intractability of the issue is demonstrated by the (lack of) progress of diversity on Wall Street. In an industry in which 90% of fund managers are men, and the vast majority of p&l roles are held by men, diversity in the years after the financial crisis went backwards. In other words, those who arguably were responsible for the financial crisis not only didn’t lose out after it — they consolidated their power. (And, by the way, does anyone think that the financial crisis would have been worse if there were more women on those Wall Street trading floors? I didn’t think so.)
So what is the answer to achieving corporate diversity?
- It’s to recognize that society sends powerful messages of what leaders look like, and those are hard to overcome; and that the drive to work with people like yourself is likewise powerful. (“He’s a culture fit” can be code for “He makes me feel comfortable because he is like me.”) We have to do something different if we truly want to unlock the performance potential of true diversity.
- It is finding out what the gender pay gap is and closing it. When a company’s attrition rate among millennial women declines, this will pay for itself, since the No. 1 reason millennial women change jobs is to make more money.
- It is changing family leave policies to be more generous. The implementation of a family leave policy pays for itself in the first year when women return from maternity leave at a greater rate. It can be even providing the same family leave for primary and non-primary caregivers (which can pay for itself over time, as this eliminates the “mommy track.”)
- It is halting hiring when the company skews away from reflecting the composition of the broader population. (You’ll be surprised how quickly, “But we can’t find any people of color for this role” is overcome when you say, “Fine, then we won’t fill the position.”)
- It is paying managers for hitting diversity goals, just like you do for sales goals.
- It is making the next board member someone who looks nothing like your other board members.
Corporate resistance to diversity masks itself in comments like, “But, these changes take time.” Or, “You can’t just do this overnight.”
But, actually, you can. Simply stop talking about why you can’t — and do it.